Correlation Between Ab Value and Franklin Federal
Can any of the company-specific risk be diversified away by investing in both Ab Value and Franklin Federal at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ab Value and Franklin Federal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Value Fund and Franklin Federal Tax Free, you can compare the effects of market volatilities on Ab Value and Franklin Federal and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ab Value with a short position of Franklin Federal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Value and Franklin Federal.
Diversification Opportunities for Ab Value and Franklin Federal
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ABVCX and Franklin is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ab Value Fund and Franklin Federal Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Federal Tax and Ab Value is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ab Value Fund are associated (or correlated) with Franklin Federal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Federal Tax has no effect on the direction of Ab Value i.e., Ab Value and Franklin Federal go up and down completely randomly.
Pair Corralation between Ab Value and Franklin Federal
Assuming the 90 days horizon Ab Value Fund is expected to generate 2.96 times more return on investment than Franklin Federal. However, Ab Value is 2.96 times more volatile than Franklin Federal Tax Free. It trades about 0.09 of its potential returns per unit of risk. Franklin Federal Tax Free is currently generating about 0.07 per unit of risk. If you would invest 1,510 in Ab Value Fund on August 31, 2024 and sell it today you would earn a total of 560.00 from holding Ab Value Fund or generate 37.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Value Fund vs. Franklin Federal Tax Free
Performance |
| Timeline |
| Ab Value Fund |
| Franklin Federal Tax |
Ab Value and Franklin Federal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Value and Franklin Federal
The main advantage of trading using opposite Ab Value and Franklin Federal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Value position performs unexpectedly, Franklin Federal can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Franklin Federal will offset losses from the drop in Franklin Federal's long position.| Ab Value vs. Mesirow Financial Small | Ab Value vs. John Hancock Financial | Ab Value vs. Royce Global Financial | Ab Value vs. Goldman Sachs Financial |
| Franklin Federal vs. Western Asset Municipal | Franklin Federal vs. Ab Value Fund | Franklin Federal vs. Scharf Global Opportunity | Franklin Federal vs. Iaadx |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Valuation module to check real value of public entities based on technical and fundamental data.
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